Xylem Inc.

Welcome to the Xylem first quarter 2022 earnings conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Matt Latino, Head of Investor Relations. Please go ahead.

Thank you, Ashley. Good morning, everyone, and welcome to Xylem's first quarter 2022 earnings conference call. With me today are Chief Executive Officer Patrick Decker and Chief Financial Officer Sandy Rowland. They will provide their perspective on Xylem's first quarter 2022 results and discuss the second quarter and full year outlook. Following our prepared remarks, we will address questions related to the information covered on the call. I'll ask that you please keep to one question and a follow-up and then return to the queue. As a reminder, this call and our webcast are accompanied by a slide presentation available in the investor section of our website at www.xylem.com. A replay of today's call will be available until midnight on May 11th. Please note that replay number is 1-800-934-5153 or 1-402-220-1182. Please turn to slide two. We will make some forward-looking statements on today's call, including references to future events or developments that we anticipate will or may occur in the future. These statements are subject to future risks and uncertainties, such as those factors described in Xylem's most recent annual report on Form 10-K and in subsequent reports filed with the SEC. Please note that the company undertakes no obligation to update any forward-looking statements publicly to reflect subsequent events or circumstances, and actual events or results could differ materially from those anticipated. We have provided you with a number of, with a summary of our key performance metrics, including both GAAP and non-GAAP metrics in the appendix. For purposes of today's call, all references will be on an adjusted basis unless otherwise indicated, and non-GAAP financials have been reconciled for you and are also included in the appendix section of the presentation. Now, please turn to slide three, and I will turn the call over to our CEO, Patrick Decker. Thanks, Matt, and good morning, everyone.

The team came into 2022 with strong momentum. and they've taken full advantage of robust underlying demand around the world to deliver a first quarter operational result above expectations. Revenues grew 4% organically, surpassing our guidance. Despite ongoing chip shortages constraining our utilities business, supply is slowly improving, which is reflected in quarter sequential revenue growth and EBITDA margin expansion in our metrology business. Revenue strength was also broad-based globally. We saw healthy growth in every region, excluding China, given the COVID impact there. Western Europe was a standout, delivering 10% growth in the quarter. But the robust global demand for our offering comes through most clearly in the pace of order intake. Orders were up 14% for the quarter, with record order bookings in every segment. MNCS set the fastest pace with a 25% order surge as the value proposition of digital technologies continues to fuel demand. Order's performance across the portfolio pushed our already healthy backlogs to 50% growth year on year. EBITDA margin performance was also above our previous guidance due to strong price realization, which mitigated much of the inflationary pressure, while at the same time, we continued to drive productivity and further simplification throughout the business. As a result of that good work from the team, we delivered EPS of 47 cents, again, above our expectations. The quarter did present some fresh challenges. China's ongoing response to COVID is having significant impact on our business, and it will have flow-on effects for some time in the global supply chain. And while our European business delivered exceptional revenue growth, the Euro rate began to move unfavorably. So conditions are dynamic, but the quarter's operational results show that the team is doing an excellent job navigating the challenges and managing what it can control on a global basis. Looking ahead, We're in a very strong position as structural demand continues to be robust in all end markets and regions. And we have market leadership in the categories where demand is greatest, especially in digitally enabled solutions. So we are raising our guidance for the year and are on track to deliver the longer-term growth and strategic milestones we laid out at our Investor Day last fall. Before turning over to Sandy for performance detail by segment, I want to mention how proud I am of the Xylem team. and of our partners for their response to the war in Ukraine. When the war broke out, the ZYLUM team stepped up right away to provide for the safety and well-being of all of our Ukrainian colleagues and their families. Similarly, our team has shown extraordinary support by raising money for the humanitarian relief work of our NGO partners, whose activities include providing essential water and sanitation services both in Ukraine and to refugees. It's become one of our most successful match giving campaigns ever, and I could not be prouder of the team. Now I'll hand over to Sandy to review the quarter's results by segment.